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ECONOMICS CONCEPTS

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Title: ECONOMICS CONCEPTS Author: Samuel Perez Last modified by: Samuel Perez Created Date: 9/19/2007 2:36:48 AM Document presentation format: On-screen Show – PowerPoint PPT presentation

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Title: ECONOMICS CONCEPTS


1
ECONOMICS CONCEPTS
2
CETERIS PARIBUS
  • CETERIS PARIBUS "with other things being the
    same,"
  • "Everything else remains constant".
  • Example
  • An increase of the price of oil will result in
    an increase of the general price level of the
    economy, ceteris paribus.

3
FACTORS OF PRODUCTION
Are all the resources that contribute, or may
contribute, to the production of goods and
services.
  • Land encompasses land and all resources derived
    from land (water, minerals, crops, etc)
  • - PAYMENT
  • Labor effort expended by people to create goods
    or services
  • - PAYMENT
  • Capital human-made resources that are used to
    produce other goods and services (tools,
    buildings, etc). There are two kinds of capital
    Physical capital and human capital
  • Physical capital - human-made objects used to
    create other goods or services (machines,
    buildings, tractors, presses, etc).
  • Human capital - investments made in people
    including education, health and experience that
    help to produce more or better goods or services
  • - PAYMENT
  • Entrepreneurship The ability and knowledge to
    combine the other 3 Factors.
  • - PAYMENT

4
SCARCITY
  • Insufficiency of supply for needs or specific
    demand
  • Resources are scarce according to the use of
    them.
  • I.E. Economics books in San Juan el Alto.
  • Economics books at the classroom. (18
    issues)
  • Because resources are limited, they are scarce.

5
UTILITY The satisfaction received from
consuming a good or service
6
Opportunity Cost
  • What would you do with 100?
  • What would you do next Saturday?
  • Resources are scarce, therefore decisions should
    be taken. CHOICES.
  • Scarcity implies that choices must be made, and
    making choices implies the existence of costs!
  • Opportunity Cost
  • Is the cost of the next best alternative forgone

7
Free and Economic Goodsthere is no free lunch
  • A free good does not incur any opportunity cost
    in its production
  • An economic good is a good which uses scarce
    resources in its production. That is why there is
    an opportunity cost of the alternative good
    foregone

8
EXAMPLES OF COSTS
  • Everything has a cost even if you dont pay for
    it.
  • Fresh Air
  • Free e mail service.
  • You win the lottery.
  • National Security.
  • A sunset.
  • A full moon.

9
PRODUCTION PROSSIBILITY FRONTIER PPF
10
DIFFERENCE BETWEEN GROWTH AND DEVELOPMENT
  • Economic Growth The rate of change in total
    output of a society from one year to the next.
    Is a quantitative measure. GDP.
  • GDP Gross Domestic Product.

11
ENHANCING growth through Industrialization (K/L)
pp23
12
Enhancing Growth through productivity (Q/L) (Q/L)
13
DEVELOPMENT
  • Economic Development The process of improving
    the quality of human life through increasing per
    capita income, reducing poverty, and enhancing
    individual economic opportunities. Also includes
    better education, improved health and nutrition,
    conservation of natural resources, a cleaner
    environment, and a richer cultural life.
    Qualitative measure.

14
Development
15
SUSTAINABLE DEVELOPMENT
  • Sustainable Development Development that meets
    the needs and aspirations of the current
    generation without compromising the ability to
    meet those of future generations.
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